The $100 Bill Could Be the Next Victim in the War on Cash; Don’t Become One Too

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The war on cash heated up this week when a former Obama economic adviser/ex-Treasury secretary floated the idea of eliminating the $100 bill.

Lawrence Summers called for death to the Benjamins in a post on his Washington Post blog titled It’s Time to Kill the $100 Bill. The post announced the release of a paper by Harvard’s Mossavar Rahmani Center for Business and Government senior Fellow Peter Sands arguing that governments should stop issuing high-denomination currency such as 500 euro notes and $100 bills. The paper even proposed withdrawing such currency them from circulation.

Cash warriors always publicly center their arguments on the need to limit cash as a way to fight drug crime, terrorism, and tax fraud. This was exactly how Summers framed the argument in his blog post:

Sands’ extensive analysis is totally convincing on the linkage between high denomination notes and crime. He is surely right that illicit activities are facilitated when a million dollars weighs 2.2 pounds as with the 500 euro note rather than more than 50 pounds as would be the case if the $20 bill was the high denomination note. And he is equally correct in arguing that technology is obviating whatever need there may ever have been for high denomination notes in legal commerce…I’d guess the idea of removing existing notes is a step too far. But a moratorium on printing new high denomination notes would make the world a better place.”

As the Wall Street Journal points out, this isn’t a new idea. In 1986, New York Mayor Edward Koch urged President Reagan to eliminate the $100 bill as a way of hindering drug traffickers.

As you can see, when pundits talk about the war on cash, they almost always focus on crime prevention. But government policy-makers and central bankers have other reasons for wanting to eliminate currency. It seems highly unlikely that it’s just a coincidence all of this talk about abolishing the $100 bill is happening at the same time central bankers are lurching into the realm of negative interest rates.

When banks implement negative rates, they literally charge customers to hold their money. You’re not likely to save money in the bank if it’s costing you to do so. Central planners believe this will motivate you to spend, thus stimulating the economy. But in order for this scheme to work, it has to be impossible for you to simply stuff currency under your mattress. That’s what the war on cash is really all about. After parroting the usual reasoning relating to crime prevention, the Wall Street Journal actually revealed the truth about the war on cash:

Many economists believe the ability of central banks to implement negative-interest-rate policies is hampered by the ability to hold cash. Even in places like Switzerland, where rates have gone negative on government bonds, banks don’t pass on negative rates to retail deposits for fear depositors will withdraw their cash. That limits the effectiveness of lowering rates below zero. Yet rates can go somewhat negative because holding and safeguarding large amounts of currency is an expensive undertaking. The more expensive it is to hold cash, the further negative rates can go and the easier negative rates are to pass on to corporations and consumers. Eliminating high-value currency would increase the cost and difficulty of hoarding cash.”

The simple fact is government officials and central bankers yearn for the abolition of cash because it means more control over you.

Gold historically serves as an excellent way to store and preserve wealth, especially in times of economic turmoil. When you see negative rates, it’s a sure sign the economy is in a downward spiral, but they are a positive for gold. When you invest in precious metals, you don’t have to worry about trying to stuff bundles of $1 bills under your mattress or in your microwave in order to save money.

When you see ideas like eliminating the $100 bill floated, it’s easy to write them off as nothing more than far-fetched policy discussions. But it wasn’t long ago negative interest rates were considered an “impossibility.” Today’s crazy ideas often become tomorrow’s reality.

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If 1,000,000 in 100s weighs 2.2 pounds then .. 1,000,000 in 20s should weigh 11 pounds as there are 5x as many bills .. The bills weigh the same no matter if 1.oo ,5.oo , 100.oo or any other …Some one who made this statement does not know what they are talking about .. This destroys the credibility of your whole site …

Speaking of credibility, Ron:
1) The numbers you’re referencing are quoted from Summers’ blog post — those aren’t Schiff’s calculations; and
2) the 2.2 lb measurement was in 500 Euro notes, not $100 bills.
At current rates, there would be just under 28x as many $20 bills as 500 Euro bills in $1MM, so assuming the 2.2 lb measurement is correct, so is the math.
It’s probably a good idea to re-read before posting criticisms. As it stands, the only credibility in question is your own. Sounds like you’re searching hard for something to discredit Schiff — keep trying, and maybe you’ll find something at least marginally more substantive than your own math error.

Ron says your credibility is in question but he fails to note that the article references a million dollars in 500 Euro notes weighing 2.2 pounds vs. over 50 lbs when it’s denominated by US 20’s. The math in the article is correct. Ron’s 5x “credibility” assumption is based on 100’s weighing 2.2 lbs, which is clearly not stated. Even if Euro’s and 100’s weighed the same and the exchange rate was set on par with each other, there would be 5x more hundreds than 500 Euro notes, weighing 11 lbs, and 25x more 20’s weighing 55 lbs….Using todays exchange rates the 20’s would weigh in over 60 lbs….

As I see it, they are merely quoting what it is written in a blog, so if there is any mistake, it is in the blog.
The error I actually see is mixing euros and dollars. Notice they start talking about the 500 euro bill, but then go to a 20 dollar bill. Not quite an apple to apples comparison.
BTW, your calculations are incorrect. You should have used a 500 bill, not 100. That would give you 25x instead of 5x, which if multiplied by 2.2, you would get 55 pounds.

Considering it was Summers post it makes one wonder if anyone should listen to anything he has to say. Even his wrong number doesn’t account for the incorrectly applied multiplication. Figures lie and liars figure I guess.

$1,000,000 in $100 bills weighs approximately 21 to 22 pounds, not 2.2 pounds. Small denomination currency makes it more difficult to bribe politicians that’s why Korea does not issue notes any higher than equivalent to $10 USD. You need to fill a Hyundia Santa Fe with currency to deliver a $1,000,000 bribe to a politician.

Ron, not sure if the article has been adjusted since you made your post about the weight of a million dollars, but the article as I read it refers to 2.2 pounds when measured in 500-euro notes, not $100 bills as you mention.

Either they corrected it, thus addressing your concern, or you didn’t read it properly thus destroying your own credibility. Oops, eh? I’ll give you the benefit of the doubt on this one. 🙂

Ron, you need to read more carefully. That statement is a quote from Lawrence Summers, not the article’s author, and he said $1M in 500 EUR notes, not $100 bills. This destroys the credibility of your whole post. 🙂

The article said 2.2lb in 500 euro notes or >50lb in $20 bills. So it’s not as simple as multiplying by 5. Right now 1 euro is worth a little over $1.10 so a 500-euro note is worth about $550. If $1m weighs 2.2lb in European $550 bills then it will weigh 2.2 * (550/20) = 60.5lb in $20 bills (assuming euro notes are the same weight as dollar bills, which may not be quite accurate).

I think the author stated that $1M in 500 euro notes weighs 2.2lbs. At least that is how I read it. $1M in US $100 increments weighs about 22 pounds, so using the 20’s instead would increase the weight to about 110 pounds. That is significantly more than 50lbs stated, but I am sure readers get the point.

‘Yours’ is the credibility which has been destroyed. Your math would be fine if your facts were correct. I would suggest that you read more ‘carefully’ someone’s comment if you intend to be so ugly in your feedback. The quote clearly said,”when a million dollars weighs 2.2 pounds AS WITH the 500 EURO note …”. In this case of the quote, the ‘Hundred’ wasn’t even mentioned. Another variable is present, the current exchange rate between the two, and for a long time has required more dollars to equal any sum of Euros. Your criticism was not only unkind, but quite incorrect.

The war on drugs was lost decades ago. Larry had to run back to his drawing board when his policies failed to help the economy…
We need $500. bills to keep up with inflation. – backward thinkers in charge. J

The problem isn’t how much paper money weighs but what is the cost of the paper, ink and labor to print them. One paper dollar or a 100 dollar Federal Reserve Note makes no difference. It costs the Federal Reserve about 3 cents to make a one paper note payable to the government bureau of printing. Then all that valuable paper is loaned out into circulation for interest via the commercial banking system at it’s face value. Remember the initial cost of producing the paper money.
One thing to know is that all metallic coin is put directly into circulation interest free by the commercial banking system. The reason? Coin is not the private money of the private Fed. Reserve System as is the Federal Reserve Note.
One of the reasons the Fed. wanted the government to mint one dollar metallic coins was because of the 3 cent replacement costs for worn out paper note. However, the metallic dollar is and was not popular.
Coin and paper notes are but a small fraction of the total “money” supply which is mostly electrons dancing around on the hard drives of computers.
One thing that the government will never take out of circulation are metal coins. Other than gold and silver, people should put away metal non-silver coins for transactions when the paper money goes to its real intrinsic value, Zero!
Think about this. Even though the logistics of this is not possible at this time, if people were to use only non-interest bearing metallic coin minted by the government the Federal Reserve System would dry up and die.

If you believe the real motive of governments is to enforce their current efforts at financial repression by restricting the use of cash as a means of avoiding the tax/penalty/confiscatory intent of negative interest rates then why for heavens’ sake do you think they’ll stop at cash?

If 1,000,000 in 100s weighs 2.2 pounds then .. 1,000,000 in 20s should weigh 11 pounds as there are 5x as many bills .. The bills weigh the same no matter if 1.oo ,5.oo , 100.oo or any other …Some one who made this statement does not know what they are talking about .. This destroys the credibility of your whole site …

It might be a nice idea in the States or Europe to get rid of $100 notes or €500. Withdrawing the $100 note would cause a lot of problems in the rest of the world. In Africa $50 and $100 notes are a staple in commerce. Notes of $20 and smaller are regarded as “junk” to be bought only at discount!

This idea might make some sense in the world of think tanks and ivory tower economists. In the real world getting rid of the $100 note would be a disaster.

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